Hockey's costings farce gets a second round

Joe Hockey has decided to ignore both PEFO and the Charter of Budget Honesty.

AAP: Alan Porritt

Having not learnt his lesson at the last election, Joe Hockey has again decided that anyone could do a better job at costing the Coalition's policies than the one department actually designed to do this, writes Mungo MacCallum.

For many months now, Tony Abbott has been warning his colleagues not to take the voters for granted. The Coalition might have been a long way ahead in the polls, but things were bound to get closer as election day approached.

And indeed they have - a lot closer than Abbott anticipated. The return of Kevin Rudd has meant this is not a time for arrogance or hubris. But apparently his shadow treasurer, Joe Hockey, has not got the message: not only has he decided to treat the punters like mugs, but he has apparently forgotten that just three years ago he tried the same trick, and it ended in disaster.

The problem is once again the costing of opposition promises. To date Hockey has released very few figures, and most of those are little better than guesstimates; he has, he said repeatedly, been waiting for PEFO before submitting everything to Treasury, as required by Peter Costello's Charter of Budget Honesty.

The unlovely acronym PEFO is another Costello innovation: the Pre-election Economic and Fiscal Outlook. It was introduced to prevent incoming governments claiming that they had been dudded by their predecessors; in 1983, Bob Hawke purported to discover a huge shortfall in the books relinquished by Malcolm Fraser, and in 1996 John Howard did the same, christening it Beazley's black hole after the former finance minister turned opposition leader.

This was not Howard's only piece of creative wordplay; to deal with the black hole, he also invented the non-core promise, a phrase which was to haunt him and his party for many years.

PEFO is there to provide an up-to-date set of figures as close to polling day as possible; oppositions can no longer say they have been kept in the dark by a tricky and devious government.

But Hockey has decided to ignore both PEFO and the Charter of Budget Honesty, arguably the most useful legacy of the last Coalition budget. His excuse is that Treasurer Chris Bowen will be making an economic statement of his own in the near future, and he does not trust that: "Quite clearly, by flagging an economic statement, the government is trying to bully the public service into a set of numbers which clearly do not properly represent the state of the budget."

In other words, the shadow treasurer regards Treasury not only as incompetent but corrupt. Not only do Martin Parkinson and his colleagues get the numbers wrong, but they make them up to suit their political masters. So Hockey is going to bypass the only people in a position to know what is going on and get a few of his mates to do his costings for him - you can really trust them.

The trouble is that this is exactly what happened in 2010. Then, the excuse was that the Coalition had submitted some of its policy costings to Treasury for checking, and the results had leaked - highly embarrassing as Treasury found that Hockey and the shadow finance minister Andrew Robb had got things hopelessly wrong.

So they announced with some indignation that Treasury could not be trusted and instead they would go to private enterprise, a Perth firm of accountants called WHK Horwarth - the fifth largest in Australia, bragged Robb - who could possibly doubt their findings? And of course the Libs didn't especially when Howarth issued a very brief report saying, yes, it all added up.

But Howarth had simply accepted what Hockey had given them: all the assumptions and all the estimates. All they had done was to check the arithmetic. It was clear case of garbage in, garbage out; but with the election only days away, Hockey and Robb got away with it - until it turned out to be a hung parliament, and Abbott set out to woo the independents to make him prime minister.

The independents jacked up: they wanted proper costings and insisted Abbott submit his proposals to Treasury after all. Cornered, Abbott did so; and the answer came back that there appeared to have been questionable assumptions and double counting which added up to a Hockey black hole of nearly $11 billion.

In the Financial Review, Laura Tingle wrote that it proved that the whole gang of them were either liars or clunkheads (or both), and not fit to govern. Hockey, rather sheepishly, admitted that there was, it appeared, a difference of opinion. It wasn't the only factor that propelled Tony Windsor, Rob Oakeshott and Andrew Wilkie into Julia Gillard's camp, but it was certainly a significant one.

And the icing on the cake, from Labor's point of view, came when the Institute of Chartered Accountants found that the Horwath effort was not, as it purported to be, either an audit or a review, but simply an exercise in basic arithmetic, and as a consequence reprimanded and fined the fifth biggest firm in Australia. This time Hockey's comment was somewhat more terse: "I'm not getting into it, mate."

Those who forget history are doomed to repeat it. OK, this time Hockey plans not to go just to one firm, but to spread the burden of costing between the Parliamentary Budget Office, some friendly state treasurers, and a variety of private companies. But the fact remains that none of these agencies, however objective or well-intentioned they are, will have the same access and resources as does the federal Treasury; after all, evaluating both the broad picture and all the details is what it's there for.

And of course there is unlikely to be a hung parliament this time, with independents needing to be brought on side. But there just might be; and in any case, the electorate, having been badly stung three years ago, is likely to be a bit more sceptical of Hockey's and Abbott's claims to have found truly honest, transparent and believable endorsement this time around.

Still, they will have their defenders. While most of the media reported Hockey's announcement with some incredulity (one obvious comment was that if he did not trust or believe Treasury, he might have some difficulty administering the portfolio), The Australian ran a small story on page two by its economics editor, David Uren, under the heading: "Hockey weeds out rubbery figures."

Now there's one institution the Coalition can always rely on.

Mungo Wentworth MacCallum is a political journalist and commentator. View his full profile here.

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